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The Geographic Distribution of Economic Activities of the USA Multinational Enterprises

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  • Felipa Mello Sampayo

Abstract

This paper examines empirically a range of theoretical hypotheses about the determinants of FDI location in a panel data regression framework. The results of the estimation of a gravity model lend support to the proximity-concentration and internalisation hypotheses. Also, the fact that FDI has been found to be decreasing in the competition posed by alternative locations is suggestive of the superiority of the share version of the gravity model over its classical formulation. A panel data cointegration-type analysis between FDI and GDP, and per capita income differential suggests that GDP has a positive impact on FDI, but provide mixed evidence as to whether per capita income differential reflects demand or supply determinants of FDI. Causality tests between income, income differential and FDI points to FDI playing a positive role on economic growth and convergence.

Suggested Citation

  • Felipa Mello Sampayo, 2006. "The Geographic Distribution of Economic Activities of the USA Multinational Enterprises," DEGIT Conference Papers c011_040, DEGIT, Dynamics, Economic Growth, and International Trade.
  • Handle: RePEc:deg:conpap:c011_040
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    File URL: http://degit.sam.sdu.dk/papers/degit_11/C011_040.pdf
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    More about this item

    Keywords

    Foreign direct investment; multinational enterprises; gravity model; dynamic panel data model; panel data cointegration;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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